The DCAA has clear rules for contractors’ use of electronic timesheets, including daily entry, audit trails, total time accounting, labor distribution, and the real-world habits auditors may review during a floor check.
Automated systems can make timekeeping faster, cleaner, and easier to review, but software alone doesn’t satisfy current DCAA timekeeping requirements.
Government contractors still need a process that proves labor was entered daily, charged correctly, approved properly, and preserved with a clear audit trail.
Automated Timekeeping Still Has To Prove the Basics
DCAA-compliant timekeeping starts with one simple principle: labor costs must be traceable to the correct cost objective.
An automated system may support that goal, but the DCAA will still look for evidence that employees understand how to record their time and that supervisors review those entries carefully.
For contractors using PROCAS, Deltek, Unanet, Hour Timesheet timekeeping, or another platform, the system should connect employee entries to contracts, projects, indirect accounts, payroll, labor distribution, and the general ledger.
A polished interface won’t carry much weight if the company can’t show how the data moves through the accounting system.
A sound accounting system, according to DCAA guidance, should use timekeeping that connects labor charges to intermediate or final cost objectives. Direct and indirect labor must be charged through labor distribution to the appropriate cost objectives.
In practice, automated timekeeping for government contractors must support both the timesheet process and the accounting trail that supports it.
Daily Time Entry Needs To Be More Than a Setting
The DCAA expects employees to record time daily. The daily time entry requirement reduces the risk of reconstructed time, memory-based allocations, and end-of-week adjustments made to fit a budget.
A reliable DCAA electronic timesheet process should show when entries were made, when they were changed, and who touched the record. Late-time entry shouldn’t disappear from the system.
Supervisors and administrators need visibility into patterns such as repeated Friday bulk entries, delayed approvals, and missing charge codes.
Daily entry also needs employee accountability. According to DCAA guidance, a sound labor charging system depends heavily on the individual employee’s role in recording time accurately.
Employees should certify that their timesheets reflect the hours worked and the correct cost objective, and supervisors should approve them after review.
Audit Trails Need To Tell the Full Story
A timesheet audit trail is one of the strongest tests of an automated system. The DCAA doesn’t just care about the final version of the timesheet. Auditors may want to know what changed, when it changed, who made the change, and whether the employee agreed with the correction.
Corrections need to preserve both the original time entry and the corrected entry, with proof that the employee concurred; an administrator shouldn’t be able to quietly revise time without a visible record.
A strong automated process preserves the full timeline. Original entry, revised entry, reason for the change, employee approval, supervisor approval, and system timestamp should all be available. That level of detail helps contractors show that the system is controlled, not just convenient.
Labor Distribution Is Where Timesheets Become Cost Evidence
DCAA labor reporting doesn’t stop once an employee submits a timesheet. Labor distribution compliance connects recorded hours to contract costs, indirect cost pools, billing records, and financial statements.
Looking at direct vs. indirect labor charging deserves special attention. Under current DCAA guidance, the type of work drives how time should be charged. A contractor shouldn’t charge labor based on available funding, internal preference, or pressure to keep indirect rates stable.
For example, an engineer working on a specific cost-reimbursable contract should charge that work to the proper direct cost objective. Time spent on general business development, internal meetings, or administrative duties may belong in an indirect account.
Automated systems should make the correct charge numbers available, restrict improper use where possible, and produce reports that help management spot mischarges before an audit does.
Total Time Accounting Protects the Integrity of Labor Costs
Total time accounting is another area where automated systems can either help or hide problems. DCAA guidance states that all hours worked, whether paid or unpaid, should be recorded because total hours affect labor costs and overhead allocations.
Uncompensated overtime can distort labor rates when salaried employees work beyond 40 hours but record only 40. FAR 52.237-10 defines uncompensated overtime as unpaid hours worked by exempt employees above an average 40-hour workweek while performing direct contract work.
Automated systems should be configured to capture total hours worked, not just paid hours. The reporting should also help accounting teams understand how extra hours affect direct labor, indirect rates, and cost allocation.
Floor Checks Test the Process Employees Actually Follow
Written procedures may look complete, but a DCAA floor check can reveal how well they hold up in everyday practice.
The DCAA’s labor floor check guidance explains that auditors may ask employees what they’re working on, which charge numbers they use, how often they enter time, how corrections are made, and who approves their timesheets.
Remote and hybrid work don’t remove that scrutiny. The DCAA’s Contract Audit Manual discusses floor checks involving work-at-home employees and remote verification procedures. Contractors need to have a written timekeeping policy, employee training, supervisor discipline, and system records that all point in the same direction.
Strong preparation starts before the notice arrives. Employees should know how to describe their current work and charge numbers. Supervisors should understand their approval responsibilities.
Accounting teams need a clear trail from employee time entries to the labor distribution records that support each charge.
Turn Automation Into a Defensible Timekeeping Process
DCAA timekeeping requirements focus on accurate labor reporting, clear accountability, and records traceable to the work performed.
Automated systems can support DCAA-compliant timekeeping, but the real test is whether the process captures daily time, preserves a complete audit trail, supports total time accounting, and connects labor to the correct cost objectives.
If you’re unsure whether your current setup would hold up during a floor check, cost audit, pre-award survey, or labor-charging review, Diener & Associates can help.
Request a consultation with our team, and we’ll review your timekeeping process, labor distribution reports, written policies, and automated system controls so you can address gaps before DCAA finds them.